10 Jun 2009
Demand for laser equipment remains flat, but rising RFQ activity promises a modest recovery later this year.
The latest data from Longbow Associates, a market-research firm based in Cleveland, Ohio, indicates that the laser and optics industry might have bottomed out. While demand remains flat since Longbow's last market update in April, optics companies have seen an increase in both the quantity and quality of RFQs over the last two months.
Mark Douglass, senior equity analyst for industrial technology at Longbow, explained: "RFQ activity has picked up recently, reflecting expectations for a recovery in the second half of 2009 as industrial production starts to rebound off the severe contraction in 1Q09. However, the bounce will only be to recessionary levels."
Douglass anticipates that suppliers of optical components will see an immediate benefit from any uplift in production, but that laser sales will take longer to recover. "Laser sales are more closely tied to capital spending," he said. "We expect capital spending to recover slowly over the next 12–18 months and believe that significant open capacity exists in most end markets, further delaying many laser purchases."
Longbow's findings are based on interviews with US-based laser makers and integrators, optics and beam delivery suppliers, and contract manufacturers. Of the respondents, 44% report weaker demand versus the same period last year, 53% feel demand is flat, while 3% reported an increase. For comparison, Longbow's April update suggested that 42% of respondents had seen demand weaken on the prior year, while 21% reported flat demand and 37% had seen an increase.
Looking at the detail, companies with greater exposure to industrial and automotive markets are still on the slide, particularly since order backlogs continue to be eroded by customer cancellations. Reports on the photovoltaic sector are mixed, although on balance Douglass believes that the market is still weakening. The good news is that military and defence markets continue to hold strong, as does the scientific and research sector.
In a reflection of those end-market trends, Longbow reports that sales of high-power lasers have fallen off more dramatically than those of low- to medium-power lasers. Customers are also choosing fibre lasers in preference to solid-state and CO2 lasers, which in turn means that IPG Photonics is continuing to gain market share.
Pricing also remains on an even keel, with 5% of companies reporting a slight increase in average selling prices and 3% seeing small declines. "We received no reports of increases or cuts in excess of 5%," said Douglass. "Accounts receivable have become less of a problem as OEMs are requiring more money upfront and delaying shipments to some large customers until they receive payment."